I read with interest here the case of the bank economist who was suspended from work for making a prediction. What is "wrong" about the prediction?
As economists, ours is a thankless job in the commercial world. Every company feels it needs an economist to dissect what is going on the local and global economies probably half-heartedly because most CEOs feel that they do know their economics and they have a view which is correct because they are already so successful. So, an economist in a company is nothing more than just a security blanket to do the needed job of writing about what is happening or has happened and to tell them everything is alright.
This is the terrible job of an economist, and this is what we were taught in schools with all our models and econometric estimations which are really all about the past because we need data (which necessarily have to be historical and of the past) to prove whatever we have chosen to prove. The only really useful thing that comes out of econometric modelling is the estimation of key parameters, to know whether a coefficient is a low or high value - as this will help us to conclude about the responsiveness of economic variables to one another.
Once we have a fairly good idea of what the model looks like, then maybe we can have a certain of confidence to make a projection from the past into the future on the assumption that the structure of the model remains intact and relevant for the future. So, projection is a mechanical thing to do and it does not require must thinking. Of course, the problem with using a variable-dependent model to make projections is that, if you have five variables that will project one variable, and that we need to put in five future variables to project one, it might just be easier to simply give a future value for that one variable that we are interested in in the first place. Of course, we will not have a story to tell. So the model-based projection is "better" because you can say, if this is true and if that is likely to happen, then this will be the projected outcome.
But predictions, to my mind, are an entirely class of creatures all together. Projections, after all, are often argued and justified and hidden behind conditions; projections are conditional predictions. But a prediction, on its own, is a unconditional prediction. "I say the world will end tomorrow." This is a prediction and the only thing left to do is to see whether tomorrow comes. In my mind, predictions are meant for prophets and for those who are brave enough to be able to give a pronouncement that "having considered the current situation and assessed all the possibilities for the future, what it is, I say that this is going to happen in the new year." A categoric pronouncement.
While projections are usually straight-line projections, predictions are interesting only because they are most spectacular when they deal with turning points. When the structure of the model breaks, and a completely new outcome catches everyone by surprise - or rather that they make incumbents very uncomfortable and unhappy because the prediction says that they are not going to be tomorrow where they are today. So predictions are based on an insight into the conditions under which the prevailing system breaks down. Theoretically, this goes into the realm of chaos theory, or more dramatically, catastrophe theory.
So, the said bank economist thought that he was making an innocent prediction about the change of government based on facts which he must argued quite convincingly, maybe too convincingly, of its likely outcome. If true, then this will be bad not to his employer (which is a bank) but his superior who is a person presumably appointed by the power of the day who have been predicted to be out of business by the next election. No to remove the economist will be tantamount to admitting the likely defeat; removing him can only be justified on the ground that is necessary to maintain public confidence, especially in the stock market is unfortunately has been taken to be barometer of the soundness of the economy. So much for the health of the system.
I can assure you that I have not written with great insight but rather with great experience and wisdom. I was lucky that I had a good boss who defended me, but at the same time, all predictions by me were unpublished until I joined an industry where all kinds of predictions including hearsay and bad dreams are considered gems which clients "would love" to read. I suppose we all earn our living by our wits, literally, in the end.
Thursday, January 31, 2013
Tuesday, January 29, 2013
Don't We Kill the Economy Anymore?
I think I must have written about this many times already in this blog, but everyday I see this phenomenon being sustained and justified as if we have found the policy panacea that would prevent the economy from ever having to fail anymore. Have we really found sustained prosperity for the world without ever there be any more adjustments in the economy and that somehow we can just simply go on like there is no tomorrow - not like there is no more future? It is really true that we do not have to fear economic adjustments anymore?
Classical economics was the economics of poverty. Human societies in general were deprived and there was more demand than the world could produce. The focus of the study of economics was the economics of production, where we subject the production frontier to the market in order to produce the most at the least cost. It coincided with the Industrial Revolution. Adam Smith saw this and promoted the economies of scale and the liberation of markets in order to bring more goods and services to more people so that more people could enjoy the newfound prosperity of the scientific method. Say's Law applied: Supply will find its own demand. There was the silver/gold standard so that the quantity of money (well, the monetary base) was more or less stable and adjustments to the monetary circulation was by way of the reserves as well as bank credit, supplemented by trade credit. The element of trust was important in order to bypass the limitation of the monetary supply and the rate of interest was at a decent 7% or 8% per annum which encouraged savings and generally a sense of frugality among the wealthy while there was a constant search for new products and production method in order to bring about a decent rate of return to pay interests and wages and still earn a decent profit. This was already a fairly sophisticated economic system compared with rural production. In a rural economy, all output would be consumed either by workers (as wages) or by the farmer (as earnings) while a certain portion of the output would be put aside for the production period. This was a fairly self-sustaining system unless there was a shock to the system like bad weather or flooding. In the commerce-oriented (and money-using economy, gold standard), there was a constant need for investment which would be needed to absorb the extra output equivalent to the expected rate in order for the economy system to sustain itself. This system worked fairly well only because there was empire provided natural resources which would be processed by the industrial machinery as well as the market to provide that required profit.
The economic system took a dramatic turn with the rise of the US and the swinging twenties and the jazz age introduced liberalism to the economy and particularly the financial markets which made Al Capone and everybody else very happy. (Al Capone made his first million by working as a telephone operator eavesdropping on stock speculators.) The expansion of the monetary supply with the increasing number of small banks and credit expansion gave rise to speculation on the stock market which eventually crashed when the small banks went bankrupt. This led to the depression, when banks started foreclosing businesses and farmers as the banks faced the backlash of the credit crunch. But this was nothing more than a tornado trying to unwind itself, rather than die down, as banks tried to restore their balance sheets. The banking system was trying to destroy the quantity of money in order to restore the value of money.
The classical economists advised for time for the markets to adjust but did not realise that the markets were themselves being destroyed. Expectations were destroyed and the trust was gone. It was when Keynes came in and argue for the restoration of the markets with the government running a major deficit in order to cover the deficit in the balance sheet of the banking system. Keynes' advice worked and this policy recommendation has been employed since WWII, and probably created it, as it led to the production of a product that destroys other things and hence could logically go on indefinitely unless something came in to give way. In some respect, the decline of the US economy started in WWII as it went on a global-destruction mode which probably wasn't all that great for economic efficiency.
While the beginnings of the expansionism of Keynes' idea was tempered by monetary restraint, with the treasury acting as a countervailing force against the spend-thrift populist government, that need for monetary restraint was romanced away by the saxophone-blowing jazz central banker called Alan Greenspan, away arguing that sustained monetary expansion was needed for an innovative US economy that never really was. The way to encourage the US economic efficiency was the Washington Protocol which dismantled all checks and controls on the US financial sector as well as the US economy itself. That openness allowed terror to enter the economy in reality to its war shenanigans outside its borders. That terror attack sent the US economy into a reversal through tight controls and hence killing off an opportunity for growth which it did not really have a chance to exploit. The policy of sustained monetary expansion was passed on to Bernanke who used it as the only tool it knows how to solve a crisis. As the last series of crises were bank-related and as banks and financial institutions were now bankrupted, with big holes in their balance sheets, it was no more possible to issue US government bonds to US banks, while private investors were (and are) looking in the face of a weak US currency. The only way out was to issue US bonds to the central bank which is now happily printing paper money in the name of Quantitative Easing. Beneath all the economic rhetoric espoused by the clever Americans, the reason why they could so far get away with their economic inefficiency (and be a champion of the world) is because as the international currency where countries are happy to hold the paper money, they are happy to print it until such time as when the world has no more confidential in the US dollar as it abuses the seigniorage of the US dollar. That time is about now.
To some extent, the so-called rampant inflation around the world is partly a reflection of the long-term decline of the US dollar as well as the rise in the fight for global resources as China and India choose not to let its people go hungry again. Countries suffering from persistent inflation problems are those who currencies are linked to the US dollar. These countries too may be suffering from economic inefficiency as they failed to respond to the rising economies of China and India.
The only way that the adverse impact of the US dollar on the world economy can be solved is by refuse to use the US dollar as the international reserve currency. Which means that the Chinese renminbi must step it, probably in conjunction with the yen - in order to ensure that there is sufficient of world reserve money to serve a growing international trade. The need for the renminbi as international reserve may be reduced if, as we all believe, that the future of the growth of the Chinese economy depends on its own international consumption and therefore there is no need for an expanded international trade. The Chinese are reluctant expectedly because they could want to source their raw materials from the rest of the world, and they really have to balance their economic and political balance in the world especially in Africa especially when the US probably is beginning to develop a reversal of their superiority complex. It is, I think, this changing of the guard at the international monetary system which will be the major adjustment in the world economy in order that balance and growth can be reestablished for the marglinalised economies in the world. After all, the sustainable prosperity of China requires a world that is at peace with the China. Zheng He's descendents, if any, may need to be pressed back in services, hopefully not in the form of junk bonds.
My little thoughts to while away a boring afternoon, as Alice would say.
Classical economics was the economics of poverty. Human societies in general were deprived and there was more demand than the world could produce. The focus of the study of economics was the economics of production, where we subject the production frontier to the market in order to produce the most at the least cost. It coincided with the Industrial Revolution. Adam Smith saw this and promoted the economies of scale and the liberation of markets in order to bring more goods and services to more people so that more people could enjoy the newfound prosperity of the scientific method. Say's Law applied: Supply will find its own demand. There was the silver/gold standard so that the quantity of money (well, the monetary base) was more or less stable and adjustments to the monetary circulation was by way of the reserves as well as bank credit, supplemented by trade credit. The element of trust was important in order to bypass the limitation of the monetary supply and the rate of interest was at a decent 7% or 8% per annum which encouraged savings and generally a sense of frugality among the wealthy while there was a constant search for new products and production method in order to bring about a decent rate of return to pay interests and wages and still earn a decent profit. This was already a fairly sophisticated economic system compared with rural production. In a rural economy, all output would be consumed either by workers (as wages) or by the farmer (as earnings) while a certain portion of the output would be put aside for the production period. This was a fairly self-sustaining system unless there was a shock to the system like bad weather or flooding. In the commerce-oriented (and money-using economy, gold standard), there was a constant need for investment which would be needed to absorb the extra output equivalent to the expected rate in order for the economy system to sustain itself. This system worked fairly well only because there was empire provided natural resources which would be processed by the industrial machinery as well as the market to provide that required profit.
The economic system took a dramatic turn with the rise of the US and the swinging twenties and the jazz age introduced liberalism to the economy and particularly the financial markets which made Al Capone and everybody else very happy. (Al Capone made his first million by working as a telephone operator eavesdropping on stock speculators.) The expansion of the monetary supply with the increasing number of small banks and credit expansion gave rise to speculation on the stock market which eventually crashed when the small banks went bankrupt. This led to the depression, when banks started foreclosing businesses and farmers as the banks faced the backlash of the credit crunch. But this was nothing more than a tornado trying to unwind itself, rather than die down, as banks tried to restore their balance sheets. The banking system was trying to destroy the quantity of money in order to restore the value of money.
The classical economists advised for time for the markets to adjust but did not realise that the markets were themselves being destroyed. Expectations were destroyed and the trust was gone. It was when Keynes came in and argue for the restoration of the markets with the government running a major deficit in order to cover the deficit in the balance sheet of the banking system. Keynes' advice worked and this policy recommendation has been employed since WWII, and probably created it, as it led to the production of a product that destroys other things and hence could logically go on indefinitely unless something came in to give way. In some respect, the decline of the US economy started in WWII as it went on a global-destruction mode which probably wasn't all that great for economic efficiency.
While the beginnings of the expansionism of Keynes' idea was tempered by monetary restraint, with the treasury acting as a countervailing force against the spend-thrift populist government, that need for monetary restraint was romanced away by the saxophone-blowing jazz central banker called Alan Greenspan, away arguing that sustained monetary expansion was needed for an innovative US economy that never really was. The way to encourage the US economic efficiency was the Washington Protocol which dismantled all checks and controls on the US financial sector as well as the US economy itself. That openness allowed terror to enter the economy in reality to its war shenanigans outside its borders. That terror attack sent the US economy into a reversal through tight controls and hence killing off an opportunity for growth which it did not really have a chance to exploit. The policy of sustained monetary expansion was passed on to Bernanke who used it as the only tool it knows how to solve a crisis. As the last series of crises were bank-related and as banks and financial institutions were now bankrupted, with big holes in their balance sheets, it was no more possible to issue US government bonds to US banks, while private investors were (and are) looking in the face of a weak US currency. The only way out was to issue US bonds to the central bank which is now happily printing paper money in the name of Quantitative Easing. Beneath all the economic rhetoric espoused by the clever Americans, the reason why they could so far get away with their economic inefficiency (and be a champion of the world) is because as the international currency where countries are happy to hold the paper money, they are happy to print it until such time as when the world has no more confidential in the US dollar as it abuses the seigniorage of the US dollar. That time is about now.
To some extent, the so-called rampant inflation around the world is partly a reflection of the long-term decline of the US dollar as well as the rise in the fight for global resources as China and India choose not to let its people go hungry again. Countries suffering from persistent inflation problems are those who currencies are linked to the US dollar. These countries too may be suffering from economic inefficiency as they failed to respond to the rising economies of China and India.
The only way that the adverse impact of the US dollar on the world economy can be solved is by refuse to use the US dollar as the international reserve currency. Which means that the Chinese renminbi must step it, probably in conjunction with the yen - in order to ensure that there is sufficient of world reserve money to serve a growing international trade. The need for the renminbi as international reserve may be reduced if, as we all believe, that the future of the growth of the Chinese economy depends on its own international consumption and therefore there is no need for an expanded international trade. The Chinese are reluctant expectedly because they could want to source their raw materials from the rest of the world, and they really have to balance their economic and political balance in the world especially in Africa especially when the US probably is beginning to develop a reversal of their superiority complex. It is, I think, this changing of the guard at the international monetary system which will be the major adjustment in the world economy in order that balance and growth can be reestablished for the marglinalised economies in the world. After all, the sustainable prosperity of China requires a world that is at peace with the China. Zheng He's descendents, if any, may need to be pressed back in services, hopefully not in the form of junk bonds.
My little thoughts to while away a boring afternoon, as Alice would say.
Monday, January 28, 2013
The Economics Of Education II
Those who are unhappy about the current education system are unhappy because they cannot get fresh graduates who are able to hit the ground running. Those who are unhappy are unhappy because they cannot get a well-paid job without having to "pay their dues to the union" by having to work for a few years with little or no pay in order just to "learn the trade" or to "get into the trade."
I think industrialists have become very greedy and they will extract as much as they can out of a situation and "go off" (to use a mild version of the phrase). There is no need for investment in human capital. Human capital is treated like a "piece of flesh" - to be used and discarded. I must say I was very disappointed when one of our supposed "wise" men who re-engineered our economy to be what it is today said, without apology, "while we did not achieve our policy objective, we have created a few billionaires." I have been discouraged with such callousness ever since I read that statement. Unashamed callousness.
My main point in this little cynical piece I am writing is that I have lost all hopes in what our current economic system can do for our unfortunate young graduates who not only have to deal with with an industrial structure that requires only low-technology, but also a dismal future clearly the way the current property market is running, it is an inflationary situation which is surely robbing the young of the future value of our currency.
I am putting the fault of our unemployment situation (now politicised as "unemployable graduates") squarely at the feet of those who are responsible for bringing our economic system to its current situation. This is probably one of the most centralised economies in the world, as almost all significant expenditures are at the dictate of the minister in charge of finance. We now do not have an economic policy, we have a policy of running the economy like a commercial enterprise who has absolutely no R&D department.
Having said that, there is really no point for the young graduates to look at the traditional sources of employment because those traditional sources have become corrupt - in the sense that it has failed to perform its required duty. There is really no point in trying to reinvent the education system so that our graduates can become "employable." (To be picky, to be "employable" does not mean they will be employed.) The unemployed graduates have no choice but to create jobs for themselves. I think a new system of funding should created for new sources of growth. (The South Korean entertainment breakthrough comes from private equity.)
I do not agree with the media to run down our young generation by dismissing them. (If I can remember, we weren't all that great in expressing ourselves when we were young either. I don't know whether we now are good at it, although we certainly do hold strong views.) I do accept that communication skills are important, but we really do not have to be snobbish about it. We should humble ourselves and try to listen and understand what the young are trying to say, even in their modern stuttering manner.
If I know, the way an indigenous culture evolves is by first going down to the grassroots and dig for ideas that are at ground zero presently in our society. I am surrounding myself with books and music and I can safely that I am old school, meaning colonial. I do not hope to be seminal in creating an aspect of Malaysian culture because I am deficient in my traditional training. I do hope that my children with their wilder exposure to the local environment as well as the world will be better ambassadors of the nascent culture that we can be proud of in Malaysia. I do not think that my children should be like me - they are already better than me, by being themselves in their newfangled technology-infested way of life.
I think industrialists have become very greedy and they will extract as much as they can out of a situation and "go off" (to use a mild version of the phrase). There is no need for investment in human capital. Human capital is treated like a "piece of flesh" - to be used and discarded. I must say I was very disappointed when one of our supposed "wise" men who re-engineered our economy to be what it is today said, without apology, "while we did not achieve our policy objective, we have created a few billionaires." I have been discouraged with such callousness ever since I read that statement. Unashamed callousness.
My main point in this little cynical piece I am writing is that I have lost all hopes in what our current economic system can do for our unfortunate young graduates who not only have to deal with with an industrial structure that requires only low-technology, but also a dismal future clearly the way the current property market is running, it is an inflationary situation which is surely robbing the young of the future value of our currency.
I am putting the fault of our unemployment situation (now politicised as "unemployable graduates") squarely at the feet of those who are responsible for bringing our economic system to its current situation. This is probably one of the most centralised economies in the world, as almost all significant expenditures are at the dictate of the minister in charge of finance. We now do not have an economic policy, we have a policy of running the economy like a commercial enterprise who has absolutely no R&D department.
Having said that, there is really no point for the young graduates to look at the traditional sources of employment because those traditional sources have become corrupt - in the sense that it has failed to perform its required duty. There is really no point in trying to reinvent the education system so that our graduates can become "employable." (To be picky, to be "employable" does not mean they will be employed.) The unemployed graduates have no choice but to create jobs for themselves. I think a new system of funding should created for new sources of growth. (The South Korean entertainment breakthrough comes from private equity.)
I do not agree with the media to run down our young generation by dismissing them. (If I can remember, we weren't all that great in expressing ourselves when we were young either. I don't know whether we now are good at it, although we certainly do hold strong views.) I do accept that communication skills are important, but we really do not have to be snobbish about it. We should humble ourselves and try to listen and understand what the young are trying to say, even in their modern stuttering manner.
If I know, the way an indigenous culture evolves is by first going down to the grassroots and dig for ideas that are at ground zero presently in our society. I am surrounding myself with books and music and I can safely that I am old school, meaning colonial. I do not hope to be seminal in creating an aspect of Malaysian culture because I am deficient in my traditional training. I do hope that my children with their wilder exposure to the local environment as well as the world will be better ambassadors of the nascent culture that we can be proud of in Malaysia. I do not think that my children should be like me - they are already better than me, by being themselves in their newfangled technology-infested way of life.
Wednesday, January 23, 2013
The Economics Of Education I
Education seems to be a favourite topic of public discussion. This is good because it shows that we are concerned about the quality of education and the great expectations that we have placed on education to show the many problems of society as well as the individual well-being - by which I mean in both cases the issue of national and personal survival.
That concern is often expressed as a criticism - that the present education is not as good as the education in the "good old days" - and how that deterioration in the education standard has led to the deterioration of the economy and society that we are now stuck in. While I read with great amusement the seriousness by which the arguments are being made, this is the same line of judgement that has been put out by all successive older generations on their respective younger generations. I am sure that there must be a certain element of generational ego coming into play here somewhere.
This probably unintentional generational condescension could the result of the general dislike that every generation of democratic societies must have, in their hearts, on their own governments.The loathsomeness may have been generated by the troubles that we see everywhere in our societies - the crimes of private citizens, the daylight robberies by public servants not excluding politicians, the general sloth that we see everywhere (felt after having witnessed how hard even buffaloes in China, Hong Kong (if any), South Korea and Japan have to work), the untouchability of private housing by fresh entrants into the labour market (now matter how clever they may be), the growing cares and worries of modern life especially when we see on the media how Mother Nature can do more harm than any industrialist on the environment, the anger we feel of how repressive regimes are in other parts of the world and how the ordinary hapless people suffer, and all those "goodies" that the mass media churn out in order to keep themselves in business by making us all stare blankly at the TV screen.
We have to vent all that frustration at someone and something. The old favourite is the government and the system. The unintended victims are the students of today.
I am sure parents in all ages feel an intense amount of anxiety for the future of their children. This is why we have greedy businessmen and corrupt politicians who work so well together as a team to squeeze every ounce of profitability (or rather, unearned and undeserved income) from the societies in which they are so intent on dominating. In this brave old world of Adam Smith, everybody must compete. The businessmen and polticians are doing just that, not necessarily among themselves (although it does seem that way) but against the ordinary citizens who must now pay and pay in order to live, and pay more and pay because inflation is a market-determined means of exhortation from everyone, including the old and infirmed, if they are to live at all - this is why the many who cannot afford the cash to live simply jump down sufficiently tall buildings or hang themselves with a sufficiently strong piece of string.
Because parents see the great achievement and success of the businessmen and the politicians, parents push their children to work hard and be like these examples of the worst that modern civilisation can produce. After all, no parents want their children to be failures, for then, they will be extra burden in an already high cost living environment. For hapless parents, they allow their sons to be gangsters and daughters to be prostitutes - which are just ugly names for things that rich parents who want to condition their children to do but in better disguised forms or in better dressings.
But, really, I do not think that current education is as bad as many of us who imagine it to be. For one thing, kids really do know a lot more, can do a lot more, and can talk back a lot more. Don't imagine that a repressive education system produces repressed kids - it produces rebellious kids. The kids may not want to communicate that to you (the repressive regime) but they will do their revenge on the social media in the best way that they know how and you may not approve their language - but that does not meant their language is not good - they can perfectly understand well among themselves but you can be merely grasping.
Whatever the education they are receiving, they will reinvent their own world. They will have their own culture (or you want to demote that to sub-culture), and they will live longer than we the older ones will. They will inherit our properties and tear them down and may even build ugly ones in their place (like we do to old architecture). Their culture and society will evolve into one where the cleverness that we now cherish so much may be redundant and their lives will go on and on so long as there is sufficient battery life to power their computers (computers? not entertainment centres?). They will live contented lives entertained by flashes of tiny electric currents while we the older one see our beautiful but dirty industrial complexes being shut down one by one.
Our old world was a world built on stringent logical human thought, as our enlightened leaders where leading us to get out of the dark ages of mysticism and theology into the brave new world of bright sparks. We eschew hearsay and rely on our own senses to observe and conclude for ourselves using our own heads. So our heads must be conditioned to think in a certain way so that we have a precisely communicable framework to transfer a piece of thought from one person to another. Because even logical thoughts are prone to errors of logical because of the instability of the human thought process, we have strict rules of logic. In the process, we have amassed huge library of scientific research some of which have proven to be useful and is now modifying our world, while most of that scientific research is now just a load of rubbish of errors and blind alleys. Nobody needs to read them anymore.
Instead, the whole body of logical thought by humans, in the last couple centuries, can be transferred and encoded in the electronic processors that we now call computers. After having done that, we really do not need logical thinking anymore - the computers can handle that logical processing. In other words, human are now redundant insofar as logical processing is concerned. Human beings must find a new role for themselves in the new world of computers that we have created.
Of course, the cleverest answer is that we have to be creative. Which is not the same as being innovative. Innovation is just like renovation of a house - you do not knock down the structure. Creation is like building something different not done before - a new house with a different shape from others.
For modern kids to be creative, they must be off their minds. For them to be completely creative, they must be totally off their minds. They do not need logic. The more complete they are without logic, the more complete they are creative. Ideas fall logically into place when they are being processed by the computers which will check for logic.
Just imagine the kids being constantly bombarded by all kinds of images and ideas at a certain numbers of images per second and they have to absorb all these in their little heads and make sense of them. It will be a wonder when they do make any sense of that. At most times, I imagine that these images will float in their minds like a primordial soup waiting for an interaction to occur. I am surprised that so few modern kids go mad.
I pity the teachers who should be totally unprepared to cope with the new environment or society. What is the role of the teacher? The teacher cannot merely dispense facts - the kids can google that. The teacher cannot just talk logic - that can be checked with the computer. The only thing that the teacher can do is to present ideas in pictorial form so that the kids can have fun piecing the pieces together. The new role of the teacher is to present new ideas - or more specifically, old ideas in new forms or old ideas with a bit of innovation. At least, the teacher can then have a chance to play that role properly. The other role for the teacher to do to motivate the kids to be interested in the subjects that they are teaching - because their are many extra-curricular subjects on the computer that the kids can explore. To do that, the teacher must be in good health and not be depressed. I propose that teachers should be given allowances to join gyms.
The last thing I probably which to recommend is that the kids should be made to feel a bit hungry. We should not overfeed them so that they will not be so lethargic. A little hungry will make the fast and processed food taste better, and a little more hunger will probably help to direct their minds (I am so sure about their energy) to things in which they have an interest and in which other people may also have an interest. A little hunger in the modern world may not bad thing at all. It may not be easy to do. We have to go from obesity, to normal, trim, lean and then maybe a little hungry. With this little hungry, I think the economics of education may also improve.
That concern is often expressed as a criticism - that the present education is not as good as the education in the "good old days" - and how that deterioration in the education standard has led to the deterioration of the economy and society that we are now stuck in. While I read with great amusement the seriousness by which the arguments are being made, this is the same line of judgement that has been put out by all successive older generations on their respective younger generations. I am sure that there must be a certain element of generational ego coming into play here somewhere.
This probably unintentional generational condescension could the result of the general dislike that every generation of democratic societies must have, in their hearts, on their own governments.The loathsomeness may have been generated by the troubles that we see everywhere in our societies - the crimes of private citizens, the daylight robberies by public servants not excluding politicians, the general sloth that we see everywhere (felt after having witnessed how hard even buffaloes in China, Hong Kong (if any), South Korea and Japan have to work), the untouchability of private housing by fresh entrants into the labour market (now matter how clever they may be), the growing cares and worries of modern life especially when we see on the media how Mother Nature can do more harm than any industrialist on the environment, the anger we feel of how repressive regimes are in other parts of the world and how the ordinary hapless people suffer, and all those "goodies" that the mass media churn out in order to keep themselves in business by making us all stare blankly at the TV screen.
We have to vent all that frustration at someone and something. The old favourite is the government and the system. The unintended victims are the students of today.
I am sure parents in all ages feel an intense amount of anxiety for the future of their children. This is why we have greedy businessmen and corrupt politicians who work so well together as a team to squeeze every ounce of profitability (or rather, unearned and undeserved income) from the societies in which they are so intent on dominating. In this brave old world of Adam Smith, everybody must compete. The businessmen and polticians are doing just that, not necessarily among themselves (although it does seem that way) but against the ordinary citizens who must now pay and pay in order to live, and pay more and pay because inflation is a market-determined means of exhortation from everyone, including the old and infirmed, if they are to live at all - this is why the many who cannot afford the cash to live simply jump down sufficiently tall buildings or hang themselves with a sufficiently strong piece of string.
Because parents see the great achievement and success of the businessmen and the politicians, parents push their children to work hard and be like these examples of the worst that modern civilisation can produce. After all, no parents want their children to be failures, for then, they will be extra burden in an already high cost living environment. For hapless parents, they allow their sons to be gangsters and daughters to be prostitutes - which are just ugly names for things that rich parents who want to condition their children to do but in better disguised forms or in better dressings.
But, really, I do not think that current education is as bad as many of us who imagine it to be. For one thing, kids really do know a lot more, can do a lot more, and can talk back a lot more. Don't imagine that a repressive education system produces repressed kids - it produces rebellious kids. The kids may not want to communicate that to you (the repressive regime) but they will do their revenge on the social media in the best way that they know how and you may not approve their language - but that does not meant their language is not good - they can perfectly understand well among themselves but you can be merely grasping.
Whatever the education they are receiving, they will reinvent their own world. They will have their own culture (or you want to demote that to sub-culture), and they will live longer than we the older ones will. They will inherit our properties and tear them down and may even build ugly ones in their place (like we do to old architecture). Their culture and society will evolve into one where the cleverness that we now cherish so much may be redundant and their lives will go on and on so long as there is sufficient battery life to power their computers (computers? not entertainment centres?). They will live contented lives entertained by flashes of tiny electric currents while we the older one see our beautiful but dirty industrial complexes being shut down one by one.
Our old world was a world built on stringent logical human thought, as our enlightened leaders where leading us to get out of the dark ages of mysticism and theology into the brave new world of bright sparks. We eschew hearsay and rely on our own senses to observe and conclude for ourselves using our own heads. So our heads must be conditioned to think in a certain way so that we have a precisely communicable framework to transfer a piece of thought from one person to another. Because even logical thoughts are prone to errors of logical because of the instability of the human thought process, we have strict rules of logic. In the process, we have amassed huge library of scientific research some of which have proven to be useful and is now modifying our world, while most of that scientific research is now just a load of rubbish of errors and blind alleys. Nobody needs to read them anymore.
Instead, the whole body of logical thought by humans, in the last couple centuries, can be transferred and encoded in the electronic processors that we now call computers. After having done that, we really do not need logical thinking anymore - the computers can handle that logical processing. In other words, human are now redundant insofar as logical processing is concerned. Human beings must find a new role for themselves in the new world of computers that we have created.
Of course, the cleverest answer is that we have to be creative. Which is not the same as being innovative. Innovation is just like renovation of a house - you do not knock down the structure. Creation is like building something different not done before - a new house with a different shape from others.
For modern kids to be creative, they must be off their minds. For them to be completely creative, they must be totally off their minds. They do not need logic. The more complete they are without logic, the more complete they are creative. Ideas fall logically into place when they are being processed by the computers which will check for logic.
Just imagine the kids being constantly bombarded by all kinds of images and ideas at a certain numbers of images per second and they have to absorb all these in their little heads and make sense of them. It will be a wonder when they do make any sense of that. At most times, I imagine that these images will float in their minds like a primordial soup waiting for an interaction to occur. I am surprised that so few modern kids go mad.
I pity the teachers who should be totally unprepared to cope with the new environment or society. What is the role of the teacher? The teacher cannot merely dispense facts - the kids can google that. The teacher cannot just talk logic - that can be checked with the computer. The only thing that the teacher can do is to present ideas in pictorial form so that the kids can have fun piecing the pieces together. The new role of the teacher is to present new ideas - or more specifically, old ideas in new forms or old ideas with a bit of innovation. At least, the teacher can then have a chance to play that role properly. The other role for the teacher to do to motivate the kids to be interested in the subjects that they are teaching - because their are many extra-curricular subjects on the computer that the kids can explore. To do that, the teacher must be in good health and not be depressed. I propose that teachers should be given allowances to join gyms.
The last thing I probably which to recommend is that the kids should be made to feel a bit hungry. We should not overfeed them so that they will not be so lethargic. A little hungry will make the fast and processed food taste better, and a little more hunger will probably help to direct their minds (I am so sure about their energy) to things in which they have an interest and in which other people may also have an interest. A little hunger in the modern world may not bad thing at all. It may not be easy to do. We have to go from obesity, to normal, trim, lean and then maybe a little hungry. With this little hungry, I think the economics of education may also improve.
Monday, January 14, 2013
2013
Will 2013 be a better, or even good, year?
The world economy has first to undo several twists in its markets:
1. Those who have been trying to argue that, despite the sustained pumping of money, there is no inflation, or even inflationary pressures in any economy of the world whatsoever, must be thinking that they have somehow discovered a black hole where all money flow into and maintain a balance in the respective economies. I don't think there is any magic in economics. When you pump money into the economic system, you hope to get output growth (which is hard in an overproduced environment), but you are likely to get money following into markets (commodities, equities and real estate) at home or simply foreign exchange outflows (which weaken the currency) and drives up (or make prices higher) in commodities, equities and real estate in other countries. The currency flows are obviously the black hole and that excessive liquidity is sloshing around global markets looking a punt - now honourably called investment.
2. Let it be learned from Japan that blowing the asset bubble is not something to be taken off lightly - for more than twenty years, it is still undergoing deflation in the property market - because prices have gone many times beyond the means of the ordinary Japanese, and many are unemployed. Abe now tries to stop the deflation by reflating the economy by printing money and he is looking for a tough central banker to do that. One good way is to rebuild the economy after the tsunami. While Japan may be going through its most difficult time yet, this could be the start of its long-term recovery which may need another 5 to 10 years at least. Laying the foundation could be biofuel and a whole spectrum of lifestyle change and new services particularly in entertainment (notwithstanding the Koreans).
3. China may be getting it right to change its political leadership - which will undo some business arrangements so that some adjustments can take place in the property and business sectors. The interlocking of politics and industries is not something that is uncommon in Asia and this is unhealthy as it leads to an acutely skewed distribution of wealth. The dichotomy of the society produces political instability. Would the super rich pay their workers well so that the workers can live comfortably in new urban centres? Would the Chinese be productive enough across the board to bring about balanced economic development and growth? It will be interesting to see.
4. The US is just at the beginning of the bursting of the asset bubble. The US conventional economic wisdom is that money pumping will save the economy from depression and massive unemployment - which is correct in being able to avert the problems for a wild. The long-term solution is output and productivity growth - which the US may be hard pressed to say that they have the edge. The Koreans seem to have snatched that edge and the production centre is still China. We have hoped that the end of detente would have a peace dividend which would have bring about growth and prosperity to the world. The US seems to be adamant at keeping the world in conflict and encourage human beings to kill their fellow beings. If the monetary expansion in the US is to expand harmed conflicts around the world, in the midst of recession and unemployment, then the US policy direction is dangerous for the world.
5. Especially in Europe where output has slumped and many young people are unemployed. Will there arise yet again a unifying leader in Europe who will blame immigrants and foreigners for their depression? Are their indeed too many human beings and not enough jobs - or is it that European cities are already passed their prime as economic entities and are now mere relics worth just a glance for the passerby? Has the excess liquidity of the super-rich from elsewhere flows in to maintain an ancient regime of style and fashion - and culture?
6. Have Malaysians bailed out of this country, taking their cash to their chosen paradise outside their homeland while the only thing that is worth while to do at home is to speculate on asset prices. When will Malaysians roll up their sleeves and get down to do some real work? The monetary authorities do not seem to be able to get the relative price mix right. Ours seem to be a high-inflation low-productivity growth infested economy. While the opposition takes the current economy as an opportunity, it does not have a clue either of how to get this economy out of the quandary.
With this, I hope to make amends for my long absence and provide some provocations as thoughts. May you have better insights. Have a good year.
The world economy has first to undo several twists in its markets:
1. Those who have been trying to argue that, despite the sustained pumping of money, there is no inflation, or even inflationary pressures in any economy of the world whatsoever, must be thinking that they have somehow discovered a black hole where all money flow into and maintain a balance in the respective economies. I don't think there is any magic in economics. When you pump money into the economic system, you hope to get output growth (which is hard in an overproduced environment), but you are likely to get money following into markets (commodities, equities and real estate) at home or simply foreign exchange outflows (which weaken the currency) and drives up (or make prices higher) in commodities, equities and real estate in other countries. The currency flows are obviously the black hole and that excessive liquidity is sloshing around global markets looking a punt - now honourably called investment.
2. Let it be learned from Japan that blowing the asset bubble is not something to be taken off lightly - for more than twenty years, it is still undergoing deflation in the property market - because prices have gone many times beyond the means of the ordinary Japanese, and many are unemployed. Abe now tries to stop the deflation by reflating the economy by printing money and he is looking for a tough central banker to do that. One good way is to rebuild the economy after the tsunami. While Japan may be going through its most difficult time yet, this could be the start of its long-term recovery which may need another 5 to 10 years at least. Laying the foundation could be biofuel and a whole spectrum of lifestyle change and new services particularly in entertainment (notwithstanding the Koreans).
3. China may be getting it right to change its political leadership - which will undo some business arrangements so that some adjustments can take place in the property and business sectors. The interlocking of politics and industries is not something that is uncommon in Asia and this is unhealthy as it leads to an acutely skewed distribution of wealth. The dichotomy of the society produces political instability. Would the super rich pay their workers well so that the workers can live comfortably in new urban centres? Would the Chinese be productive enough across the board to bring about balanced economic development and growth? It will be interesting to see.
4. The US is just at the beginning of the bursting of the asset bubble. The US conventional economic wisdom is that money pumping will save the economy from depression and massive unemployment - which is correct in being able to avert the problems for a wild. The long-term solution is output and productivity growth - which the US may be hard pressed to say that they have the edge. The Koreans seem to have snatched that edge and the production centre is still China. We have hoped that the end of detente would have a peace dividend which would have bring about growth and prosperity to the world. The US seems to be adamant at keeping the world in conflict and encourage human beings to kill their fellow beings. If the monetary expansion in the US is to expand harmed conflicts around the world, in the midst of recession and unemployment, then the US policy direction is dangerous for the world.
5. Especially in Europe where output has slumped and many young people are unemployed. Will there arise yet again a unifying leader in Europe who will blame immigrants and foreigners for their depression? Are their indeed too many human beings and not enough jobs - or is it that European cities are already passed their prime as economic entities and are now mere relics worth just a glance for the passerby? Has the excess liquidity of the super-rich from elsewhere flows in to maintain an ancient regime of style and fashion - and culture?
6. Have Malaysians bailed out of this country, taking their cash to their chosen paradise outside their homeland while the only thing that is worth while to do at home is to speculate on asset prices. When will Malaysians roll up their sleeves and get down to do some real work? The monetary authorities do not seem to be able to get the relative price mix right. Ours seem to be a high-inflation low-productivity growth infested economy. While the opposition takes the current economy as an opportunity, it does not have a clue either of how to get this economy out of the quandary.
With this, I hope to make amends for my long absence and provide some provocations as thoughts. May you have better insights. Have a good year.
Subscribe to:
Posts (Atom)